Vantage Viewpoint

EMV future takes a hit after court ruling

August 19, 2013

EMV chip technology has long been considered the next big step for the payment industry. While mobile commerce and the digital wallet are flashier technologies, EMV has already laid down the groundwork that will help it become a popular payment form in the next few years. On top of that, it is already in wide use outside of the U.S.

However, a recent court ruling could throw a monkey wrench into those plans. Bank Info Security profiled the case, which was overseen by the U.S. District Court for the District of Columbia. It essentially puts an end to the Federal Reserve's planned 1-cent-per transaction incentive for card issuers that invest in new fraud prevention technology.

The ruling has many companies re-evaluating if they want to invest in EMV at this stage. Al Pascual, a financial fraud analyst at Javelin, said that currently Citigroup is the only top 25 U.S. banking institute to adopt EMV and that is because of the amount of international business the company does.

"When considering the recent ruling on debit fees, it would not be surprising if this number [rate of EMV adoption] remains flat through next year," Pascual said.

Retailers are going to need to keep an eye on how this ruling affects the payment industry. The ruling's impact on rewriting network routing impacts how EMV will need to work, which could delay mandates and implementation. However, EMV technology is coming and merchants need to be ready. A payment solution provider can become a valuable asset during the preparation process.